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A 3rd DeLay Trip Under Scrutiny

1997 Russia Visit Reportedly Backed by Business Interests

By R. Jeffrey Smith and James V. Grimaldi

Washington Post Staff Writers
Wednesday, April 6, 2005; Page A01

A six-day trip to Moscow in 1997 by then-House Majority Whip Tom DeLay (R-Tex.) was underwritten by business interests lobbying in support of the Russian government, according to four people with firsthand knowledge of the trip arrangements.

DeLay reported that the trip was sponsored by a Washington-based nonprofit organization. But interviews with those involved in planning DeLay's trip say the expenses were covered by a mysterious company registered in the Bahamas that also paid for an intensive $440,000 lobbying campaign.

Lobbyist Julius "Jay" Kaplan, second from left, reportedly met with Rep. Tom DeLay in Moscow. He is pictured with Former Secretary of State Alexander Haig, Naftasib's Marina Nevskaya, Alexander Koulakovsky and Dr. Robert Spiro.
(Gregg Hilton -- American Foreign Policy Council)

_____Russia Trip_____

 Anatomy of a Trip: Details on how money flowed from a Russian oil company, through lobbyists to a nonprofit organization that covered the expenses of DeLay's 1997 trip to Russia.  Trip Schedule: Notes depict the visit to Moscow by DeLay.

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It is unclear precisely how the money was transferred from the Bahamian-registered company to the nonprofit.

The expense-paid trip by DeLay and four of his staff members cost $57,238, according to records filed by his office. During his six days in Moscow, he played golf, met with Russian church leaders and talked to Prime Minister Viktor Chernomyrdin, a friend of Russian oil and gas executives associated with the lobbying effort.

DeLay also dined with the Russian executives and two Washington-based registered lobbyists for the Bahamian-registered company, sources say. One of those lobbyists was Jack Abramoff, who is now at the center of a federal influence-peddling and corruption probe related to his representation of Indian tribes.

House members bear some responsibility to ensure that the sponsors for their travel are not masquerading for registered lobbyists or foreign government interests, legal experts say. House ethics rules bar the acceptance of travel reimbursement from registered lobbyists and foreign agents.

In this case, travel funds did not come directly from lobbyists; the money came from a firm, Chelsea Commercial Enterprises Ltd., that funded the lobbying campaign, according to the sources. Chelsea was coordinating the effort with a Russian oil and gas company -- Naftasib -- that has business ties with Russian security institutions, the sources said.

Aides to DeLay, who is now the House majority leader, said that despite the presence during the trip of the two registered lobbyists, DeLay thought the nonprofit organization -- the National Center for Public Policy Research -- was funding the trip on its own. Suggestions to the contrary have come to light in media reports only in the past few weeks, an aide said.

"The trip was initiated by the National Center," spokesman Dan Allen said, "and they were the ones who organized it, planned it and paid for it." Sources connected to the trip say, however, that Abramoff, acting at the behest of his Russian-connected client, Chelsea, brought the idea to the center.

Questions on Three Trips

The 1997 Moscow trip is the third foreign trip by DeLay to be scrutinized in recent weeks because of new statements by those involved that his travel was directly or indirectly financed by registered lobbyists or a foreign agent.

Media attention focused on DeLay's travel last month after The Washington Post reported on DeLay's participation in a $70,000 expense-paid trip to London and Scotland in 2000 that sources said was indirectly financed in part by an Indian tribe and a gambling services company. A few days earlier, media attention had focused on a $106,921 trip DeLay took to South Korea in 2001 that was financed by a tax-exempt group created by a lobbyist on behalf of a Korean businessman.

DeLay on March 18 portrayed criticism of his trips and close ties to lobbyists as the product of a conspiracy to "destroy the conservative movement" by attacking its leaders, such as himself. "This is a huge, nationwide, concerted effort to destroy everything we believe in," DeLay told supporters at the Family Research Council, a conservative Christian group.

The three foreign trips at issue share common elements. The sponsor of the Moscow trip, the Capitol Hill-based National Center for Public Policy Research, also sponsored the later London trip. The center is a conservative group that solicits corporate, foundation and individual donations.

Also, Abramoff not only joined DeLay in Moscow but also helped organize DeLay's subsequent London trip. Abramoff also filed expense reports indicating he paid for some of DeLay's hotel bill in London, according to a copy obtained by The Post.

Edwin A. Buckham, who was DeLay's chief of staff in 1997 and then became a Washington lobbyist for major corporations, participated in two of the three trips. In 1997, he visited Moscow twice -- once with DeLay -- and on one of these trips he returned via Paris aboard a Concorde jet with a ticket he told the Associated Press in 1998 had been financed by the National Center.

Buckham also joined DeLay on the Korea trip. Buckham did not respond to messages left by The Post.

Untangling the origin of the Moscow trip's financing is complicated by questions about the ownership and origins of Chelsea, the obscure Bahamian-registered company that financed the lobbying effort in favor of the Russian government that targeted Republicans in Washington in 1997 and 1998. Those involved in this effort also prepared and coordinated the DeLay visit, individuals with direct knowledge about it said.

In that period, prominent Russian businessmen, as well as the Russian government, depended heavily on a flow of billions of dollars in annual Western aid and so had good reason to build bridges to Congress. House Republicans were becoming increasingly critical of U.S. and international lending institutions, such as the Overseas Private Investment Corporation (OPIC) and the International Monetary Fund, which were then investing heavily in Russia's fragile economy.

Unlike some House conservatives who scorn such support as "corporate welfare," DeLay proved to be a "yes" vote for institutions bolstering Russia in this period. For example, DeLay voted for a bill that included the replenishment of billions of dollars in IMF funds used to bail out the Russian economy in 1998.

A DeLay aide said he tried to reform these institutions through the legislative process. DeLay voted to fund these agencies because their financing was usually included in appropriation bills that he generally supported, the aide said. They also noted that OPIC had the strong backing of the energy industry, including companies from Texas that received OPIC financing.

Meetings in Moscow

The Russian campaign is detailed in disclosures filed with the House by lobbyists. Those records state that Chelsea, with an address listed variously as a post office box on the British island of Jersey -- a tax haven off the French coast -- or a law firm in the Bahamas, paid at least $440,000 to fund lobbying aimed at building "support for policies of the Russian government for progressive market reforms and trade with the United States," according to lobbying registration documents.

The Washington offices of two lobbying and law firms collected the fees. Preston Gates Ellis and Rouvelas Meeds LLP -- where Abramoff then worked -- received $260,000 in 1997 and less than $10,000 in 1998; Cadwalader Wickersham and Taft LLP was paid $180,000 in 1997 and less than $10,000 annually for the next three years, according to the registrations. Their listed lobbying targets included members of the House and Senate and officials of the State Department and the Agency for International Development.

"One of the functions of the lobbying effort was to encourage U.S. policymakers to visit Russia and to learn more about Russia," Ellen S. Levinson, a lobbyist then working on the Chelsea account at Cadwalader, said in an e-mailed response to questions.

She said Preston Gates used its "contacts with policy institutes and congressional offices" to arrange these trips. Preston Gates said in a written statement that it does not comment on its work for clients.

In a Cadwalader memo dated May 6, 1997, and obtained by The Post from another source, Levinson depicted the DeLay trip as one of six organized that year as part of the lobbying effort. Others included an "advance team" that visited Moscow later that month and a visit by "think tank" experts in June. A copy of the memo was sent to Abramoff.

A total of six members of the two lobbying firms participated in these trips, according to those involved. Levinson and two Preston Gates lobbyists were members of the "advance team."

During the third visit, Cadwalader lobbyist Julius "Jay" Kaplan joined DeLay and Abramoff at a "fancy dinner" in Moscow, according to one of those present -- a circumstance first reported last month in an article about the trip in National Journal's Congress Daily.

Breaking with traditional practice for congressmen traveling overseas, DeLay did not contact the State Department in advance or meet with officials at the U.S. Embassy in Moscow regarding his meeting with Chernomyrdin, according to a department spokeswoman who said she checked with 10 people at the embassy then or responsible for facilitating congressional trips.

Allen, DeLay's spokesman, said the State Department was not contacted because "the National Center was responsible for the arrangements on the trip, including setting up the meetings. Beyond that, members of Congress aren't required to have the State Department present at meetings with leaders from other countries."

Last month, Amy Ridenour, director of the National Center, posted a statement on her organization's Web site in response to questions about DeLay's trip to Russia stating that the center itself had "sponsored and paid" for all the expenses associated with it. Ridenour and her husband also took part in the visit.

But a person familiar with planning for the trip said Abramoff -- who has long been close to DeLay -- approached the National Center with the idea for the trip on behalf of Kaplan and his client, Chelsea. That person said the expenses by the center were in turn replenished by "an American trust account affiliated with a law firm" that the person declined to name.

Kaplan declined to be quoted for this article, citing what he called "lawyer-client privilege." But another person with direct knowledge about the trip arrangements said that it was Chelsea -- which had the registered Washington lobbyists in its employ -- that "gave the money to NCPPR to pay for the trip."

This person, who spoke on the condition of anonymity to protect his business interests, added: "I didn't see anything wrong there. All these foundations get money from somewhere, and they give it out." Moreover, the source said, "this was the Russians' way of doing business then -- moving money from one firm to another."

Who Financed Travel?

The question is: Who stood behind Chelsea, and thus ultimately financed the trip? A regular office for the firm could not be located by The Post, in Moscow or at its two listed addresses; its Bahamian registration ended in 2000, officials there said. Efforts by The Post to find the three men -- one Belgian, one British, one Russian -- named in lobbying registrations as Chelsea investors or owners in lobbying disclosures were unsuccessful.

A spokeswoman for Cadwalader, Paula Zirinsky, said the firm had no contact information for anyone from Chelsea, because "persons that worked on that matter have not been with the firm since 1997." Jonathan Blank, managing partner of the Washington office for Preston Gates, similarly said his firm had no current contact information for Chelsea.

In interviews, however, five individuals with direct knowledge of the lobbying effort separately described executives of a diversified Russian energy firm known as Naftasib as being intimately involved in the lobbying.

Naftasib, which oversees interests in mining, oil and gas, construction and other enterprises from a four-story unmarked building in downtown Moscow, says it is a separate company from Chelsea but acknowledges seeking to cultivate friends in Washington in 1997.

In a written statement issued Friday in response to questions from The Post, Marina Nevskaya, Naftasib's deputy general manager, explained that her firm "wanted to foster better understanding between our country and the United States, and felt that if these trips were successful they would foster a better overall climate that could ultimately benefit Naftasib as well as other Russian enterprises."

Nevskaya said her company "did not finance in any manner" the DeLay trip or the others described in Levinson's memo. But she said Naftasib "did host and pay for some dinners for participants in some of the trips, organized a few other special events . . . and may have provided minor courtesies, such as some auto pickups and dropoffs for some visitors during one or more of the trips."

She also acknowledged providing "advice about trip logistics" before they occurred and meeting trip participants. Nevskaya did not offer details, but those involved in organizing DeLay's trip said he met with Nevskaya and was escorted around Moscow by the general manager of Naftasib, Alexander Koulakovsky. DeLay has also met with Nevskaya and Koulakovsky in Washington since then, according to several sources with direct knowledge of the contact.

During the June 1997 trip to Moscow by "think tank" experts -- one of the scheduled visits listed in Levinson's memo -- several participants said they got the impression that Preston Gates was the organizer, Naftasib was the ultimate financier and that the trip was a dry run for DeLay's visit.

"It was done through or under the auspices of NCPPR," said Bart Adams, a North Carolina journalist who joined the expense-paid trip. But he said he recalls hearing that "the money was coming from a Russian oil company."

David Lowe, an official at the National Endowment for Democracy, said he was recruited to join the trip by the Preston Gates firm; former Senate aide James P. Lucier, who also was on the trip, said Naftasib's executives played such a large role that they "seemed to be the clients of Preston Gates," a claim the firm denies. "Some American investment or tie was the end goal," said a third participant, "and the plan was to bring over some congressmen" later.

A publicist who works for Abramoff attorney Abbe David Lowell said Abramoff did lobby for Chelsea but not for Naftasib. The publicist said Abramoff thought "bringing a greater understanding of Russia to American decision makers was and is good for America."

The efforts by Naftasib's executives to curry favor among Republicans -- including DeLay -- sowed controversy at the time among conservatives. A journal published by a Washington think tank, the American Foreign Policy Council, claimed within a few days after DeLay's trip ended that it was actually "sponsored" by Naftasib. The journal -- the Russian Reform Monitor -- also highlighted what it characterized as Naftasib's tight connections to the Russian security establishment.

The journal quoted promotional literature for Naftasib that described the firm as a major shareholder in Gazprom, the state-controlled oil and gas giant. The literature also said Natfasib's largest clients were the ministries of defense and internal affairs. The literature also states that Nevskaya was an instructor at a school for Russian military intelligence officers. She declined to address those claims in response to questions from The Post.

Steve Biegun, who was then a senior Russia expert for the Senate Foreign Relations Committee and later served as executive secretary to the National Security Council during President Bush's first term, said he deliberately blocked a meeting that Nevskaya sought with Jesse Helms (R-N.C.), then the committee chairman.

"They were a client of the lobbying firm Preston Gates," said Biegun, who is now a Ford Motor Co. vice president for international governmental affairs. "I made some calls . . . and got enough warning signs" to ensure that Helms avoided dealing with the firm. Biegun said the information he obtained from his sources was "nothing that would stand up in court" but he worried that in this period, "a lot of unsavory figures from Russia were buying their way into meetings and getting their pictures taken, to put on the wall back in Moscow."

"I just had my doubts, and nobody did anything to allay them," Biegun said. "I did not know who either of them really were."

Asked to comment, Blank, Preston Gates's Washington managing partner, said in a written statement: "Chelsea was our only client. Naftasib was not our client. We did work with Naftasib representatives when their interests coincided with our client's." Blank added that "we are confident that the individuals still with the firm who were involved at the time acted ethically, appropriately, and in service of the client."